8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

February 23, 2010
Date of Report (Date of earliest event reported)

IPG PHOTONICS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0001-33155	04-3444218
(State or Other Jurisdiction	(Commission File No.)	(IRS Employer
of Incorporation)		Identification No.)

50 Old Webster Road
Oxford, Massachusetts 01540
(Address of Principal Executive Offices, including Zip Code)

Registrant’s telephone number, including area code: (508) 373-1100

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

     On February 23, 2010, IPG Photonics Corporation (the “Company”) announced its financial results for the quarter and year ended December 31, 2009. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

     The information on this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended (the “Exchange Act”, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

     (d) Exhibits

     The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1 Press Release issued by IPG Photonics Corporation on February 23, 2010.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized.

	IPG PHOTONICS CORPORATION
February 23, 2010	By:	/s/ Timothy P.V. Mammen
		Timothy P.V. Mammen
		Vice President and Chief Financial Officer

EXHIBIT INDEX

EXHIBIT
NUMBER	DESCRIPTION
99.1	Press Release issued by IPG Photonics Corporation on February 23, 2010.

EX-99.1

Exhibit 99.1

CONTACT:	Tim Mammen	David Calusdian
	Chief Financial Officer	Executive Vice President
	IPG Photonics Corporation	Sharon Merrill Associates, Inc.
	(508) 373-1100	(617) 542-5300

IPG PHOTONICS REPORTS 19% SEQUENTIAL INCREASE
IN REVENUES AND $0.07 EARNINGS PER SHARE IN FOURTH QUARTER 2009

Sequential Growth across most Markets, Applications and Products
Generated $17 Million in Cash from Operations

OXFORD, Mass. — February 23, 2010 — IPG Photonics Corporation (Nasdaq: IPGP) today reported financial results for the fourth quarter and year ended December 31, 2009.

	Three Months Ended									Year Ended
	December 31,									December 31,
(In millions, except per share data)	2009			2008			% Change			2009			2008			% Change
Revenue	$	54.3		$	58.2			-7	%	$	185.9		$	229.1			-19	%
Gross margin		36.7	%		45.6	%					34.6	%		46.8	%
Operating income	$	4.7		$	14.8			-68	%	$	9.1		$	57.2			-84	%
Operating margin		8.6	%		25.4	%					4.9	%		25.0	%
Net income attributable to IPG Photonics Corporation	$	3.1		$	9.1			-66	%	$	5.4		$	36.7			-85	%
Earnings per diluted share	$	0.07		$	0.20			-65	%	$	0.12		$	0.79			-85	%

Comments on the Fourth Quarter

“We are encouraged by the improving demand environment, which contributed to a 19% increase in revenues on a sequential basis as we exceeded our top-line guidance for the fourth quarter of 2009,” said Dr. Valentin Gapontsev, IPG Photonics’ Chief Executive Officer. “Order bookings continued to improve in the quarter and we saw sequential growth across most of our markets, applications and products as a result. While we experienced a 7% and 19% decline in revenues from the fourth quarter and full year of 2008, respectively, there was a substantial improvement from prior quarters in 2009.”

“As we met greater-than-expected demand in the fourth quarter, a significant amount of product was sold out of our inventory,” said Gapontsev. “This had the effect of lowering our overhead absorption, which affected gross profit, our bottom line and, combined with the impact of the lower average selling prices and revenue for the quarter and year, reduced earnings per share by 65% and 85% for the fourth quarter and full year 2009, respectively. Nonetheless, we are pleased to have further reduced the quantity of inventory on hand during the fourth quarter, which benefited cash flow from operations.”

“Demand for high-power welding and cutting applications and a rebound in sales to the auto industry drove an 18% increase in materials processing applications in the fourth quarter on a sequential basis, although we still reported a 10% decline year-over-year,” said Gapontsev. “Sales for medical applications in the fourth quarter continued to gain momentum and grew by more than 250% year-over-year and 60% on a sequential basis. Telecom applications sales in the fourth quarter increased by only 9% year-over-year and by approximately 70% on a sequential basis, driven by demand in Russia for

IPGP Q4 Results/2

amplifier products for long haul, broadband access and cable TV. Despite advanced applications orders having been stable for the past two quarters, the timing of government sales in the fourth quarter led to a year-over-year and sequential decline for advanced applications, of 21% and 2%, respectively.”

“During the fourth quarter, we generated $16.7 million in cash from operations, lowered inventories by $6.3 million, repaid $9.8 million in bank debt and ended the quarter with $82.9 million in cash and cash equivalents, an increase of $31.6 million from year-end 2008,” said Gapontsev. “We also reduced capital expenditures to $10.5 million in 2009, which was significantly lower than our original target of $15 million, and positively contributed to our cash flow. For the fiscal year ended December 31, 2009, cash provided by operating activities was $54.4 million and cash used in investing activities totaled $10.6 million.”

Business Outlook and Financial Guidance

“IPG’s fourth quarter represented our second-consecutive quarter of double-digit sales growth on a sequential basis and the third-consecutive quarter that we have had a book to bill greater than one,” said Gapontsev. “We also have seen year-over-year growth in certain segments of our markets. While we remain cautious, these factors give us reason to be encouraged that we will see recovery in 2010. In addition, as our top-line and manufacturing absorption increases, we would expect to achieve improvements in margins and earnings.”

“As the markets begin to emerge from the recession, customers are seeking ways to be more efficient in how they manufacture their products,” said Gapontsev. “We believe the benefits and significant cost savings that IPG’s fiber laser solutions provide will continue to be recognized, enabling us to capitalize on new opportunities and strengthen our leadership position.”

For the first quarter of 2010, IPG Photonics expects revenues in the range of $48 million to $53 million. The Company anticipates earnings per diluted share in the range of $0.02 to $0.07 based on 47,006,000 common shares, which includes 45,849,000 basic common shares outstanding and 1,157,000 potentially dilutive options at December 31, 2009.

As discussed in more detail below, actual results may differ from this guidance due to various factors including but not limited to product demand, competition and general economic conditions. This guidance is subject to the risks outlined in the Company’s reports with the SEC, and assumes that exchange rates remain at present levels.

Conference Call Reminder

The Company will hold a conference call to review its financial results and business highlights today, February 23, 2010 at 10:00 a.m. ET. The conference call will be webcast live and can be accessed on the “Investors” section of the Company’s website at www.ipgphotonics.com. The conference call also can be accessed by dialing (877) 407-5790 or (201) 689-8328. Interested parties that are unable to listen to the live call may access an archived version of the webcast, which will be available for one year on IPG’s website.

About IPG Photonics Corporation

IPG Photonics Corporation is the world leader in high-power fiber lasers and amplifiers. Founded in 1990, IPG pioneered the development and commercialization of optical fiber-based lasers for use in a wide range of applications such as materials processing, advanced, telecommunications and medical applications. Fiber lasers have revolutionized the industry by delivering superior performance, reliability and usability at a lower total cost of ownership compared with conventional lasers, allowing end users to increase productivity and decrease operating costs. IPG has its headquarters in Oxford, Massachusetts, and has additional plants and offices throughout the world. For more information, please visit www.ipgphotonics.com.

IPGP Q4 Results/3

Safe Harbor Statement

Information and statements provided by the Company and its employees, including statements in this press release, that relate to future plans, events or performance are forward-looking statements. These statements involve risks and uncertainties. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, IPG’s book-to-bill in the fourth-quarter of 2009; expectations related to a recovery in 2010; its expectation for top-line and manufacturing absorption increases, improvement in margins and earnings; IPG’s ability to capitalize on new opportunities and strengthen its leadership position; and its EPS and revenue guidance for the first quarter of 2010. Factors that could cause actual results to differ materially include risks and uncertainties, including risks associated with the strength or weakness of the business conditions in industries and geographic markets that the Company serves, particularly the effect of economic downturns; reduction in customer capital expenditures; potential order cancellations and push-outs and financial and credit market issues; the Company’s ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG’s products; effective management of growth; level of fixed costs from its vertical integration; intellectual property infringement claims and litigation; interruption in supply of key components; manufacturing risks; inventory write-downs; foreign currency fluctuations; competitive factors, including declining average selling prices; building and expanding field service and support operations; uncertainties pertaining to customer orders; demand for products and services; development of markets for the Company’s products and services; and other risks identified in the Company’s SEC filings. Readers are encouraged to refer to the risk factors described in the Company’s Annual Report on Form 10-K (filed with the SEC on March 12, 2009) and its periodic reports filed with the SEC, as applicable. Actual results, events and performance may differ materially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update the forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

IPGP Q4 Results/4

IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended December 31,						Year Ended December 31,
	2009			2008			2009			2008
	(in thousands, except per share data)
NET SALES	$	54,293		$	58,194		$	185,894		$	229,076
COST OF SALES		34,381			31,663			121,626			121,776
GROSS PROFIT		19,912			26,531			64,268			107,300
OPERATING EXPENSES:
Sales and marketing		4,300			3,315			15,157			13,900
Research and development		5,098			4,353			18,543			15,804
General and administrative		5,797			4,959			20,489			23,198
Loss (gain) on foreign exchange		47			(890	)		1,022			(2,798	)
Total operating expenses		15,242			11,737			55,211			50,104
OPERATING INCOME		4,670			14,794			9,057			57,196
OTHER (EXPENSE) INCOME, Net:
Interest expense, net		(229	)		(305	)		(1,252	)		(777	)
Other income (expense), net		223			(288	)		(36	)		145
Total other expense, net		(6	)		(593	)		(1,288	)		(632	)
INCOME BEFORE PROVISION FOR INCOME TAXES		4,664			14,201			7,769			56,564
PROVISION FOR INCOME TAXES		(1,507	)		(4,746	)		(2,485	)		(18,111	)
NET INCOME		3,157			9,455			5,284			38,453
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS		35			395			(135	)		1,799
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION	$	3,122		$	9,060		$	5,419		$	36,654
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE:
Basic	$	0.07		$	0.20		$	0.12		$	0.82
Diluted	$	0.07		$	0.20		$	0.12		$	0.79
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		45,849			44,886			45,489			44,507
Diluted		47,006			46,337			46,595			46,223

IPGP Q4 Results/5

IPG PHOTONICS CORPORATION
CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2009			2008
	(in thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	82,920		$	51,283
Accounts receivable, net		30,356			41,842
Inventories, net		52,869			72,555
Income taxes receivable		2,558			1,968
Prepaid expenses and other current assets		4,653			7,200
Deferred income taxes		7,987			6,175
Total current assets		181,343			181,023
DEFERRED INCOME TAXES		3,884			2,400
PROPERTY, PLANT, AND EQUIPMENT, Net		111,453			114,492
OTHER ASSETS		15,956			15,303
TOTAL	$	312,636		$	313,218
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Revolving line-of-credit facilities	$	6,007		$	19,769
Current portion of long-term debt		1,333			1,333
Accounts payable		5,620			7,739
Accrued expenses and other liabilities		21,189			17,988
Deferred income taxes		503			1,690
Income taxes payable		2,179			507
Total current liabilities		36,831			49,026
DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES		2,567			2,896
LONG-TERM DEBT		16,667			17,997
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock		5			4
Additional paid-in capital		293,743			283,217
Accumulated deficit		(48,424	)		(53,843	)
Accumulated other comprehensive income		11,106			8,794
Total IPG Photonics Corporation stockholders’ equity		256,430			238,172
Noncontrolling interests		141			5,127
Total equity		256,571			243,299
TOTAL	$	312,636		$	313,218

IPGP Q4 Results/6

IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,284		$	38,453
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,172			15,834
Provisions for inventory, warranty & bad debt		10,597			7,902
Other		(333	)		492
Changes in assets and liabilities that provided (used) cash:
Accounts receivable/payable		8,771			(10,733	)
Inventories		6,356			(21,661	)
Other		4,558			4,384
Net cash provided by operating activities		54,405			34,671
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(10,498	)		(37,111	)
Other		(141	)		5,493
Net cash used in investing activities		(10,639	)		(31,618	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Line-of-credit facilities		(13,795	)		7,757
Long-term borrowings		(1,344	)		(155	)
Purchase of noncontrolling interests		(508	)		(2,034	)
Exercise of employee stock options and related tax benefit from exercise		3,415			4,959
Other		(48	)		(75	)
Net cash (used in) provided by financing activities		(12,280	)		10,452
EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS		151			(194	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		31,637			13,311
CASH AND CASH EQUIVALENTS — Beginning of period		51,283			37,972
CASH AND CASH EQUIVALENTS — End of period	$	82,920		$	51,283
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	1,400		$	1,778
Income taxes paid	$	4,929		$	11,751
Non-cash transactions:
Additions to property, plant and equipment included in accounts payable	$	100		$	1,216
Inventory contributed to unconsolidated affiliate	$	247		$	—
Purchase of noncontrolling interests in exchange for Common Stock	$	3,027		$	—
Equipment contributed as investment in affiliates	$	—		$	298